How Chinese Social-Commerce Became an International Trend

24/10/2018

Facebook and Instagram embrace social-commerce? A news for Western consumers, although the integration between social media and shopping is already a trend in China. Pinduoduo and Little Red Book have transformed online shopping becoming a source of inspiration for the most famous international digital giants.

 

Now PRC exports its digital innovations. Are international social networks copying Chinese trends? Since Facebook and Instagram introduced new e-commerce features, it really looks like it.

With the rapid penetration of smartphones into our lives, many aspects of our daily activities have changed dramatically. Among these activities, the one that changed the most is how we do and conceive purchases. What we knew as e-commerce, an act of purchase by the user who chose to buy through an online platform, is now changed into a social activity closely linked to social networks.

This new way of doing online shopping can no longer be defined as e-commerce. Today we talk about social-commerce or conversational commerce, a “hybrid” that comes from the combination of social networks, messaging applications, and shopping platforms.

Trying to follow this new trend, one year ago, Facebook introduced its Marketplace, a real shopping platform perfectly integrated into the app where ads relate to the user’s interests and with its own internal search engine.

However, while Zuckerberg’s experiment is experiencing many ups and downs, Instagram is following the same path. The image-propelled social network has recently introduced the possibility for brands to tag their pictures with special tags that allow the user to buy the product. It quickly switched from a simple catalog of images for potential customers to a trusted store.

 

International social networks have thus finally entered the e-commerce market. But, what is new to the Western countries is not new in China where two years ago social e-commerce was already born

 

In the big Asian country, online shopping, in particular, social shopping, is a real lifestyle. Unlike other countries, Chinese buyers prefer to do their shopping through social networks as this turns out to be a fun and rewarding experience. In China, online shopping is not just an act of purchase but rather a way of getting in touch with people who share the same interests, a way of doing social engagement.

“The potential of social commerce is huge because people like to buy what their friends recommend. Increasingly, in China’s e-commerce landscape, people don’t know what sales channel to trust, but if they see their friends purchasing things on social commerce sites they are more likely to buy” said Shaun Rein, the managing director of China Market Research Group.

WeChat has already responded to this need by creating a communication-based ecosystem where retailers meet the customer by creating a relationship based on trust that is very different from that built by classic e-commerce companies.

 

Besides WeChat, there are some other Chinese applications which are less popular in the Western world but which represent the real forerunners of social e-commerce as we now know it: Pinduoduo and Little Red Book

 

First of all: Pinduoduo – 拼多多, roughly translated as “buy more together” – was created by the former Google engineer, Colin (Zheng) Huang, in 2015. It is an e-commerce platform that allows users to participate in groups of purchase that became quickly one of the largest e-commerce apps in China. Despite the presence of several applications that offer a social shopping experience, Pinduoduo built the greatest customer loyalty. In January 2018, the platform counted 114million active users per month and 300million users total.

The success of Colin Huang’s app comes from creating addiction and virality. In addition to offering discounts for a very short time, the app also offers the possibility of group purchases: the greater the number of buyers, the lower the price. The application plays on the Chinese habit of price bargaining and has therefore found a quick success among Chinese netizens.

Pinduoduo was the app with the fastest growth rate in history. In just two years, the company has achieved an annual turnover of $1.6 billion, it is less than half the time it took to achieve the same result at Alibaba’s Taobao.

 

Another example of social e-commerce that is successful in China but less known in the rest of the world is XiaoHongShu (小红书), literally Little Red Book, founded by Charlwin Mao in 2013. “I don’t want the world; I just want all of the world’s good things.” said a XiaoHongShu advertisement in 2015.

 

This application has nothing to do with the best-known Chinese Red Book, but it is a platform aimed at women aged 18 to 35 who want to buy luxury products from overseas, discover new trends, exchange shopping tips and share their shopping experiences.

XiaoHongShu now counts more than 100 million users, 30 million of which are active monthly, and it bases its success on the influence and trust of information shared by the users themselves. Although it started as a social network, the large number of information shared led the app to become a real e-commerce app while maintaining its social aspect. At the moment, Little Red Book ranks first among cross-border shopping apps.

Even Alibaba and WeChat decided to bridge the gap between them and new social-commerce platforms, albeit a little late. As for WeChat, this is the first to have created a real system of conversational commerce, a term coined by Chris Messina to define this hybrid of messaging and shopping.

 

After years of Western technological leadership, especially American, it is now Chinese digital innovations to export technological trends to the rest of the world. “Social commerce becomes a form of low-cost mobile entertainment, everybody has a smartphone now and shopping is cheap and fun” said Shaun Rein.

 

The whole WeChat strategy is now based on shopping but it is not experienced as aggressive advertising but rather as a fun and social engagement opportunity for Chinese customers. The social shopping was not therefore imposed by the app but sought by users who already used the application to follow their favorite brands’ official accounts and to share special deals via message.

Now, it is not wrong to say that social commerce in China is already 10 years ahead of other nations and it witnesses a very high imitation rate. The Chinese way of doing e-commerce is certainly a model that foreign countries are trying to copy, even if foreign attempts come slowly and have a less social impact.

After years of Western technological leadership, especially American, it is now Chinese digital innovations to export technological trends to the rest of the world.

The Facebook Marketplace and the new Instagram shopping function are just two examples of popular social networks that try to incorporate Chinese ideas into their own strategies, albeit a two-year delay.

China today is definitely the forerunner of changing the buyer’s habits towards online shopping. The Asian Dragon turned out to be not only a model for its growing technology but it also exports its digital innovation with its uniqueness that combines cosmopolitan modernization and nationalism that fascinates even the world’s largest digital giants.

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